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Gaining a holistic view of product life cycles offers potential for innovation.

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Companies from Apple to Unilever employ life-cycle assessments (LCAs) in their sustainability work, often at substantial expense — and reap hidden benefits.

In the last 20 years, life-cycle assessment (LCA) has grown from the academic exercise I learned as a grad student to an accepted decision making tool for sustainability management. A large number of companies, from Apple to Unilever, employ LCAs in their sustainability work, often at substantial expense. LCAs are data intensive, requiring a team of diverse professionals working collaboratively across organizational functions.

Given the effort and cost involved, what are the strategic benefits of LCA — and should you be employing them?

At its roots, LCA is a method to quantify total sustainability impacts — like resource use and environmental damage — over the entire life of a product, from “cradle to grave,” as they say. While there is informational value in the basic exercise, the real utility of LCA is comparison — that is, comparing one product’s sustainability impacts with another’s. These comparisons can be made with existing products, or they can be made with future innovations still on the drawing board. Thus, there is a “now” and a “next” of LCA use.

The Now of LCA

Companies perform an LCA on existing products to assess baseline environmental performance. This then forms the basis for prioritizing performance improvement investments. Your LCA product profile will highlight “eco-hotspots” in the lifecycle, which are where the bulk of environmental impact occurs. A Siemens LCA of lighting, for example, found that the majority of environmental impact came from the use phase in customer’s homes and spurred the company to improve lamp efficiency. Alternatively, LCAs identify hotspots in manufacturing processes, as in the microchip industry, where LCA fingered toxic solvents in chip production as a major impact and led to cleaner substitutes like lemon juice.

Another “now” use of LCAs is marketing and commercial. Customers today routinely request the sustainability performance information that LCAs can provide. The German furniture manufacturer Kusch+Co uses LCAs to produce environmental product declarations for their entire product line, proof points that are integrated into the company’s marketing copy. Documenting marketing claims in this way builds customer trust and avoids charges of greenwashing. Australian vintner Taylors Wines uses LCA to validate its 100% carbon neutrality claims, for example.

LCA can also serve to benchmark your product’s performance relative to your competitor’s and serve as the basis for sustainability differentiation in product advertising. Relative environmental performance advantages can be found at any point in the life cycle and provide opportunities to accentuate sustainable attributes of your product line.

In a “now” LCA, you are comparing your existing product’s performance against itself at different points in its life cycle and against your competitors’ products. But documenting the current state of affairs is of limited long-term value. Sustainability is ultimately about innovating new and better products that meet customer needs but also align with resource limitations. It is about the “next” healthier and enhanced thing.

Using LCA to Find the Next

Because LCAs can point out where the big sustainability flaws lie in a product system, it is a good eco-innovation tool. It can be used to evaluate the sustainability implications of new products on the design table or, better yet, direct product development teams to new sustainable solutions not yet in the market.

When used as an additional product development tool, LCA can be used as part of an interative stage-gate process to evaluate the environmental implication of design choices at each step of the development. Product modifications, such as new material choices, can be screened not just for immediate environmental impacts but impacts further down the life cycle — say, in the customer use phase or end-of-life. Levi Strauss used this approach when developing its Dockers WellThread line of clothing and through careful design choices improved manufacturing, use, and end-of-life performance of its clothing. And if LCA results are disappointing, they can help reduce cost by terminating unsustainable projects at early stage.

Beyond individual product efforts, LCAs can be powerful if they drive a holistic perspective of the entire product system. This can foster both cross-functional collaboration inside the company and cross-organizational collaboration among company suppliers and customers.

Many times, the LCAs identify the biggest hotspots to lie beyond the facility gates. When they lie upstream with suppliers, improving performance may mean rethinking sourcing decisions. SC Johnson, for example, uses screening approaches to identify toxic materials in the inputs it purchases from suppliers and works to find more environmentally responsible substitutes. On the other hand, the biggest improvements may lie with our customers. The chemical giant SABIC, for example, uses LCA to develop products that solve customer sustainability issues in industries from packaging to automobiles.

Should You Be Using LCA?

There are many caveats, but the reality is that if you’re not doing you own LCA, someone else is already doing it for your products. Take the Sustainability Consortium, the child of Walmart’s massive sustainability initiative. This consortium of companies, NGOs, and academics is set on driving sustainability through the consumer products universe by making sustainability performance more transparent and by setting science-based standards. LCA is an important tool in this process and is being applied across industries.

This story is playing out over time in all industries. As the sustainability expertise fostered by practices like LCA diffuses through industries and sustainability standards emerge, strategic opportunities for action are foreclosed.

Are you being left out?

About the Author

Gregory Unruh is the Arison Group Endowed Professor at George Mason University in Fairfax, Virginia, and the MIT Sloan Management Review’s Guest Editor for the Sustainability Big Ideas Initiative. He can be reached at unruh@mit.edu.

About the Author

Gregory Unruh is the Arison Group Endowed Professor at George Mason University in Fairfax, Virginia, and the MIT Sloan Management Review’s Guest Editor for the Sustainability Big Ideas Initiative. He can be reached at unruh@mit.edu.

3 Comments On: Strategic Sustainability Uses of Life-Cycle Analysis

drsergekuznetsov | September 23, 2015

How about connecting product LCA with company LCA?

leslie crawford | September 25, 2015

Life cycle assessments are not only useful for consumer products.
ACCIONA, a Spanish renewable energy and infrastructure group, has applied the same methodology to measure the cradle-to-grave environmental impact of two construction projects in Spain: a railway viaduct and a motorway. In fact, I believe ACCIONA is the first construction group to certify the environmental footprint for the entire life cycle of an infrastructure project. This is known as an “Environmental Product Declaration”, an international standard for measuring the environmental impact (use of water, materials, CO2 emissions, and costs of decommissioning) of a product throughout its useful life. The benefits of this kind of exercise for a construction company are the same as for makers of consumer products: you can compare the environmental impact – and associated costs – of alternative building methods. You have more information with which to select your projects, and it also gives you greater insights into the environmental risks and responsibilities of a project throughout its entire useful life.

Eric Mieras | September 25, 2015

Dear Gregory,

You’re raising a good point in your article that the results form LCAs can be used much more for strategic purposes and innovation. Knowing where your biggest impacts in your life cycle are, definitely helps to get the right focus on opportunities for innovation, not only within the company itself but throughout the whole value chain. At the moment much of the use of LCAs is limited to ad hoc use on a product level and that’s a pity. There’s a huge potential to benefit from the insights in where your impacts are if you use insights gained with LCAs from a holistic, strategic point of view. In general I believe that to take sustainability to a next level the chasm between sustainability on corporate and product level needs to be crossed. And Life Cycle thinking can play a role in building that bridge.

We have worked on this with our clients and developed an approach that helps LCA practitioners – as that’s our background at PRé – to increase the impact of what they do and align product metrics with strategic KPIs. It includes mapping corporate KPIs with product metrics from an LCA to assess what product innovations or improvements can contribute to the corporate KPIs. We have categorized the corporate KPIs based on relevance and potential impact for specific products. Of course the “high relevance, high impact” have priority, but the category “no relevance (from a corporate KPI point of view), high impact” can be used for strategic innovation as these show potential value that is not yet captured. This really helps brand managers or business units to focus on the KPIs that are most relevant for them as they can have a real impact. As this requires combining a top-down and bottom-up approach it would be interesting to hear the CEO perspective on this.